Carbonxt Secures $500,000 Funding via Convertible Notes at $0.10 Conversion Price
Carbonxt Group Limited has secured $500,000 through convertible notes from major shareholder Phelbe Pty Ltd, simultaneously increasing its ownership in New Carbon Processing, LLC to 47.4%.
- Issued 500,000 convertible notes at $1 face value, convertible at $0.10
- Convertible notes expire in three years with free-attaching options
- Proceeds allocated to working capital and $250,000 investment in New Carbon Processing
- Ownership in New Carbon Processing increased to 47.4%
- Securities issued under ASX Listing Rule 7.1 placement capacity
Convertible Note Funding Secured
Carbonxt Group Limited (ASX: CG1), a cleantech company specialising in activated carbon products for industrial pollution control, has announced a $500,000 funding boost through the issuance of convertible notes. The notes, issued to major shareholder Phelbe Pty Ltd, carry a face value of $1.00 each and are convertible into ordinary shares at a price of $0.10 per share. This structure effectively allows noteholders to convert their investment into 5 million shares over a three-year term.
Strategic Use of Funds
The proceeds from this convertible note issue are earmarked for working capital needs and a targeted investment of US$250,000 into New Carbon Processing, LLC, a US-based entity in which Carbonxt is increasing its ownership stake to 47.4%. This move signals Carbonxt’s intent to deepen its footprint in the North American market and enhance its operational capabilities through this partnership.
Additional Incentives for Noteholders
In addition to the convertible notes, noteholders will receive free-attaching options at a ratio of one option for every three notes held. These options are exercisable at $0.10 and also carry a three-year expiry, providing an additional incentive and potential upside for investors. The issuance falls within the company’s placement capacity under ASX Listing Rule 7.1, ensuring compliance with regulatory requirements.
Implications for Shareholders and Market
While the convertible notes will dilute existing shareholders upon conversion, the capital injection is expected to strengthen Carbonxt’s balance sheet and support growth initiatives. The increased stake in New Carbon Processing may also unlock synergies and expand Carbonxt’s product reach in industrial air purification and wastewater treatment markets. However, the timing of note conversion and market reaction remain variables to watch closely.
Looking Ahead
Carbonxt’s board has authorised the release of this announcement, with further details to be disclosed in an upcoming Appendix 3G filing. Investors will be keen to monitor how this capital raise translates into operational progress and whether the expanded US investment delivers the anticipated strategic benefits.
Bottom Line?
Carbonxt’s convertible note raise and increased US investment set the stage for growth but raise questions on dilution and execution.
Questions in the middle?
- When will the convertible notes be issued and what is the expected timeline for conversion?
- How will the increased ownership in New Carbon Processing impact Carbonxt’s revenue and operations?
- What is the market’s likely reaction to the dilution from convertible notes and options?
